Research On The Behavior And Consequences Of The Encroachment Of Interests By The Controlling Shareholders' Equity Pledge

In the current dilemma of corporate financing,equity pledge has gradually developed into a preferred financing method for listed companies due to its advantages of strong liquidity and good convenience.Especially in recent years,equity pledges have been in a rapid development trend,and the frequency of pledges continues to increase.However,in 2018,China's capital market was significantly adjusted,and the risks of equity pledges were increasing,and the problems caused were also more prominent.The research on equity pledges is also becoming more and more important.Although equity pledge is an individual shareholder's behavior,it will have a positive or negative impact on listed companies.In particular,after the controlling shareholder pledged the equity,he encroached on the interests of the listed company,which brought bad consequences to the company and damaged the interests of investors.This article starts from the research background and significance,and sorts out and summarizes the domestic and foreign literature on equity pledge.Then introduce the theoretical basis: the principal-agent theory,the theory of private interests of control rights and the theory of information asymmetry,paving the way for the subsequent research.Using case analysis method to study the pledge behavior of the controlling shareholder Lin family.In the process of case analysis,first of all,the situation of ST Guanfu's controlling shareholder and equity pledge was reported.Next is the mechanism analysis of the consequences of interest encroachment under equity pledge.It is found that a high percentage of equity pledge will increase the separation of controlling shareholder's control power and cash flow right and reduce its hollowing out cost.Motivation.Then it introduces and analyzes the controlling shareholder's interest infringement.The Lin family mainly encroached on the interests of listed companies through non-operating occupation of funds and illegal guarantees.The next part is the research on the consequences of interest embezzlement under equity pledge,which is mainly analyzed from five perspectives: negative short-term market response,weakened solvency,risk of controlling shareholders facing loss of control rights,damage to the interests of small and medium shareholders,and impact on power holders.Finally,it is concluded that the equity pledge of the controlling shareholder is likely to be a signal of its encroachment on the company's interests.Three proposals were made to increase supervision,pay attention to the financing risks of equity pledges,and strengthen the company's internal governance.